Kaiser Ventures Inc., a spinoff of defunct Kaiser Steel Corp. that has holdings in racetracks, a prison and water wells, said Friday that it has hired Merrill Lynch to explore the possibility of selling off some of its major real estate assets.
The decision to hire an advisor comes after the company's two largest shareholders in October pressured Kaiser to come up with a plan for increasing the value of their holdings.
"The company has a responsibility to address those issues," said David Rogers, an analyst with Marion Bass Securities Corp. in Charlotte, N.C. He added that Kaiser may maintain the status quo or it could start selling off some or all of its substantial land holdings.
Kaiser Vice President Pamela Catlett said the company is considering completing two major development projects, including the controversial Eagle Mountain landfill in the Mojave Desert, to boost land asset value.
On Friday, Kaiser shares rose $1.94 to close at $13 on Nasdaq.
The Ontario-based company, founded as Kaiser Steel in 1941 by Henry Kaiser, was a mighty manufacturer of steel for warships used in World War II. It was forced to redevelop its properties after the steelmaker went bankrupt in 1987.
What emerged were several diverse ventures, including holdings in Penske Motorsports' California Speedway, a 90,000-seat auto race track on the site of the former steel mill near Fontana; a 400-inmate state prison in Blythe, where company miners once carved iron ore out of the desert; and well water (once used to cool steel at the mill) that flows to more than 100,000 Inland Empire homes and businesses and is now leased by the Cucamonga County Water District.
Rogers said Kaiser's hiring of Merrill Lynch was "fortuitous timing" since California's real estate market appears to be on an upswing.
"There is some substantial real estate that is extremely valuable and strategically placed at the 10 and 15 freeways," he said.
In 1997, Kaiser Ventures had $10 million in revenue and $848,000 in profit. Catlett said Kaiser may pursue plans to turn 450 of its 600 undeveloped acres in Fontana into a trucking and warehouse operations center and to complete the Eagle Mountain landfill, which would include converting a 4,000-acre abandoned iron ore mine into a garbage dump.
Last year, the Riverside County Planning Commission supported Kaiser's plans for the landfill, but in February a San Diego County Superior Court judge overturned its request, over two issues: endangerment of the survival of the desert tortoise and the landfill's proximity to Joshua Tree National Monument.